The Mexican government might have cancelled lithium mining concessions that the Chinese firm Bacanora Lithium had won 12 years ago, but the fight is far from over. The firm, a subsidiary of Ganfeng Lithium, said in an interview with EL PAÍS on Monday that it intends to go through the Mexican legal system to defend their permits and does not rule out an international arbitration proceeding. “Nothing is off the table”, said Peter Secker, Chief Executive Officer (CEO) of Bacanora, “we will defend our ownership of the licenses to the full extent.”
Originally a British firm, Bacanora has been working in Sonora since 2011. When they picked up the 50-year licenses, there was no known lithium in the area, but the land seemed promising. From 2011 to 2014, the company drilled over 60,000 meters, which yielded a standard resource statement that estimates the licensed field has 8.8 million tons of lithium carbonate in the ground, so they proceeded to build a large demonstration plant, which is a facility built to demonstrate to interested parties that they can extract and produce the key mineral found in electric vehicle’s batteries. The next stage would be to build an $800-million-dollar complex to produce the mineral at a large scale.
But their plans came to an abrupt halt when, in April 2022, Congress approved mining legislation send by President Andrés Manuel López Obrador’s that made lithium a “strategic mineral of the state.” The government then created Litio Mx, a state-owned company that is yet to be given a budget. The decree through which the company was created has ambiguous language that states that Litio Mx could partner with “institutions” in their lithium mining activities, which could potentially include for-profit, private companies. Weeks later, Bacanora’s concessions were canceled.
“Over the last 12 years, we’ve spent tens of millions of dollars in Sonora on these licenses,” said Secker from his office in England. When the initial changes in mining law came, it was understood that companies who had valid concessions would be “grandfathered” through the legislation changes, he explained. “And then obviously, sometime early September, we were informed that the government would be canceling the licenses,” the CEO said.
“We do not believe that it’s legally valid, and we will maintain all our legal rights to defend this for the fact that we have spent many tens of millions. We’ve exceeded all the requirements for spending on the licenses. We’ve built a pilot plant; we have a design for a project that will produce 35,000 tons a year of lithium carbonate. It would be one of the largest plants in the world,” he said. That amount of lithium is enough to make one million electric vehicles, according to the company.
Last year, Bacanora filed an amparo, a legal figure common in many Latin American countries that works as both an injunction and an appeal and are still waiting on a timetable for the hearing in Sonora. When asked if the company would consider turning to the World Bank’s arbitration court for international disputes (ICSID), Secker responded: “We will work through the Mexico legal route and then consider anything else at a later date, but nothing is off the table. We will defend our ownership of the licenses to the full extent.”
Ganfeng has mines in Asia, Australia, Africa, and South America, and Secker’s tone is conciliatory when talking about Mexico. The company, he said, is open to working in the form of a joint venture with the authorities, whether it is the federal government or the Sonora government, or even with the new state-owned company Litio Mx.
“Ganfeng has the money to do this. It’s got the technology, and it has the people to develop this project without any assistance from the government. However, we have had discussions with the government over the last few years and, and we’re happy to work with the government. We just need to sort out their apparent attempt to cancel the licenses,” Secker said.
Suggestions that López Obrador’s decision to cancel the Chinese company’s concessions has been influenced by the United States, Mexico’s top trading partner, are nothing but “conspiracy theories,” said Secker. “I’ve heard that before… We believe that from a Mexican point of view, it would be far better to have a lithium hub in Sonora, where they could have their own lithium, producing their own batteries, supplying to their own vehicles, and then delivering it into the U.S.”
“There has been a political motivation for this, and we just have to work around it,” the executive concluded.
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